'Serious About Investment' Hyundai Department Store Issues 200 Billion Won in Public Bonds Again After Six Months

Short-term CP to be refinanced with corporate bonds

Accelerating 'Vision 2030' achievement through store renewals and new outlet openings

Hyundai Department Store is returning to the public bond market after six months. The purpose is to improve financial soundness by refinancing short-term borrowed funds used for investment into long-term corporate bonds.

Exterior view of Hyundai Department Store Apgujeong Main Branch.

According to Hyundai Department Store on the 4th, it will conduct a demand forecast for public corporate bonds worth 200 billion KRW on the 13th of this month. The bonds consist of 80 billion KRW in 2-year bonds (30-1) and 120 billion KRW in 3-year bonds (30-2), with a credit rating of AA+ (stable). In April, they issued 300 billion KRW worth of public bonds, and now they are issuing an additional 200 billion KRW within half a year.

A Hyundai Department Store official explained, "The main purpose is to improve financial soundness by converting short-term instruments such as commercial paper (CP) into long-term instruments." It is analyzed that, since this year the decision on corporate bond issuance has shifted from the board of directors to the CEO, they have started converting high-interest short-term debt into long-term borrowing.

As of the semi-annual report, Hyundai Department Store's short-term borrowings amount to 1.193 trillion KRW. Two years ago, short-term borrowings were only 120 billion KRW, but with increased issuance of private placement CP, general loans, and electronic short-term bonds, short-term borrowings have increased by more than 900%.

Hyundai Department Store has increased CP issuance because it is expanding investments to achieve ‘Vision 2030’. The 100 billion KRW capital increase for Hyundai Department Store Duty Free also contributed. Vision 2030 aims to maximize synergy among group affiliates and expand group sales to 40 trillion KRW by 2030. This means doubling the current sales scale. The company’s chosen method is to renew major stores and expand store locations. To show how serious the company is about investment, as of the first half of the year, operating cash flow was 280 billion KRW, while facility investment reached 200 billion KRW.

Store renewal focuses on differentiation according to commercial districts and consumer trends. For example, the newly opened Hyundai Department Store Mokdong branch in March introduced a specialty section for customers in their 20s and 30s. Among the 227 brands housed, 58 were either not previously present in the department store or were introduced for the first time in the western Seoul commercial district. The food hall on the basement first floor of the Hyundai Department Store Apgujeong main branch, opening this month, was designed to quickly reflect domestic gourmet trends. Since it underwent a full renovation for the first time in 19 years, efforts were made to create a premium atmosphere.

Next year, the company is expected to invest in new outlet stores. Currently, Hyundai City Outlet Cheongju (2025) and Hyundai Premium Outlet Busan (2027) are planned. In particular, the Busan outlet will be developed on approximately 30,000 pyeong (about 99,000 square meters) in the center of Eco Delta City, the largest development complex in western Busan. It is expected that over 300 billion KRW in cash will be paid next December for the final payment.

An industry insider said, "If there was massive investment in store renewal in the first half of the year, next year the focus will be on the new Busan and Cheongju outlets. Since the acquisition of Zinus increased borrowing burdens considerably, it seems they are taking measures to improve financial stability considering interest rates," he observed.

This content was produced with the assistance of AI translation services.